Italy sold about 25% of Banca Monte dei Paschi di Siena SpA for approximately €920 million ($1 billion) as part of its plan to divest from the bailed-out lender.
Italy sold 314.9 million shares for €2.92 apiece, with a 5% discount on Monte Paschi’s closing price, the Finance Ministry said Monday in a statement. The size of the offering was increased from an initial planned disposal of a 20% stake because of strong demand, according to the statement.
After declining as much as 5.8% at the opening in Milan, Monte Paschi shares were down 4.8% at 9:27 a.m. local time at €2.92.
The transaction shows “market support for the ongoing restructuring and improving stock liquidity,” Citigroup Inc. analyst Azzurra Guelfi wrote in a note. “The market will continue to focus on the next step of state exit/stake reduction, and the choice between further market placement and potential merger/combination option.”
Controlling Stake
Italy began the process of selling Monte Paschi last month by hiring advisers as Prime Minister Giorgia Meloni seeks to maximize the value of the state’s controlling stake. The disposal can be done in one or more stages, through a public offer or through extraordinary operations, including a combination, the ministry said at the time.
Rome has long struggled to sell its 64% stake in Siena, Italy-based Paschi. Two years ago, the previous government tried and failed to combine Paschi with UniCredit SpA. But progress made under Chief Executive Officer Luigi Lovaglio, who implemented a turnaround after years of restructuring, has made Paschi more appealing to investors.
The European Union allowed Italy to nationalize Monte Paschi in 2017 on the condition it be re-privatized with an initial deadline set for 2021, which was then extended to 2024.
The government is seeking to merge Paschi with a similar-sized peer to create a new hub which would retain the world’s oldest banking brand, Bloomberg reported in September. The sale of a minority stake ahead of such a deal would buy Meloni time and show she’s committed to complying with EU rules. It would also make the remaining stake less expensive for any potential partner, people with knowledge of the matter have said.
Founded in 1472, Monte Paschi has undergone years of painful efforts to turn its business around. The bank was first bailed out in 2009 after it was hit by souring loans and derivatives deals that backfired. In the following decade, it struggled to deliver consistent profit, given limited room for maneuver under terms the EU set.
UBS Group AG, Bank of America Corp. and Jefferies Financial Group Inc. acted as joint global coordinators and joint bookrunners for the share sale.
Read More:
Monte Paschi Sale Process Kicks Off as Italy Hires Advisers
A Plan to Rewrite the Ending of Italy’s Monte Paschi Saga
Monte Paschi Profit Beats Estimates on Rising Lending Income
--With assistance from Peter Eichenbaum and Chiara Remondini.
(Updates with shares in third paragraph, analyst in fourth)